Tens of thousands of jobs are linked to seamless trade with the European Union. Multinational firms fly staff to Ireland, France, Germany and the low countries without interference from border control officials.
Then there is the example of the crankshaft used in the BMW Mini, which crosses the Channel three times in a 2,000-mile journey before the finished car rolls off the production line. It is one of the classic trips made by hundreds of car parts that would be stopped at the border in the event of a no-deal Brexit.
Northern Ireland would be one of the worst-affected regions, as food manufacturers use ingredients from south of the border and sell the final product in the republic too.
The CBI gives the example of a Northern Irish bread-maker that buys flour from Ireland, makes the product in the north, and then transports bread to Dublin. Even if the UK continues to recognise the EU HGV licence used by the Polish driver (for example) and the EU food standards that determine the bread’s shelf life, after Brexit the loaf could be inedible by the time it has reached its destination or so expensive that local bakeries quickly step in and win the day.
Nissan is among the carmakers to say that they have already started getting their parts from the UK to offset the effects of a hard Brexit that involves restrictions on immigrant labour and tight border controls. But its scenario-planning cannot cope without a deal of some sort.
Unemployment could be pushed up by the loss of ‘frictionless’ trade with the EU.
Will I be able to take out cash abroad?
Banks were among the first to plan for a hard Brexit that might deny them the “passporting” rights that allow money transfers and derivatives transactions to happen seamlessly across borders.
The last year has seen a succession of UK banks and insurers set up offshoots in what will remain of the EU, allowing them to bypass Britain if they need to. Foreign banks that have based their European HQs in London have done likewise.
This level of contingency planning means that it is most likely that British travellers will be able to withdraw funds abroad and transfer money the day after Brexit, whatever the outcome. But a last-minute decision to crash out of the EU is likely to send the pound tumbling, meaning that Brits abroad will find the ATM gives them a fraction of what they expected. And there could be extra charges to compensate for the higher administration costs faced by banks.
Other service industries are unlikely to be quite as prepared, even though they collectively account for 40% of EU trade, up from 23% in 1999. And to show its importance to UK firms, this rise of almost a quarter compares with a 6% increase in non-EU trade over the same time period.
The CBI says: “Exports of business services, such as design, advertising and architecture, together with financial services, account for over half of the UK’s overall growth in services exports.And these sectors may be particularly vulnerable to a sudden re-emergence of trade barriers with the EU.”
Will planes still fly?
Ask Ryanair’s chief executive, Michael O’Leary, and the answer will be no. He says that without a deal at least six months before the March 2019 deadline, there will be chaos at British airports.
O’Leary said at best he would need to place “health warnings” on flights. At worst he will be forced to rejig routes so that they bypass UK airports altogether.
“If Britain gets pushed out of the EU, it is absolutely the legal position that flights must stop. You’ve got to negotiate that bilaterally,” he has said. “If we don’t know the legal basis for which they’re being operated, we’ll be forced to cancel those flights by December 2018, so we can put those flights on sale in Europe.”
There are Tory backbenchers who treat his comments as scaremongering, but the recent collapse of Monarch is held up as a good example of the threat to aviation when the paperwork and legal niceties get in the way of business.
Monarch passengers asked why the collapsed company’s grounded planes couldn’t take them home from their holiday destinations. The answer was that they were in the hands of administrators, and legal flight information on them was therefore invalid.
O’Leary is saying that without a reciprocal deal, a flight from the UK to France would be in breach of French and EU rules, leaving itself open to being sued by the authorities and passengers.
Source: The Guardian